The special committees that both companies formed to evaluate the possible combination have been dissolved. The move came after several shareholders objected to the deal.
A Murdoch trust owns about 40 percent of the voting stakes in both companies, which shared a governing structure until a scandal over Murdoch’s London tabloid journalists hacking into the voice mails of public figures prompted the family to split them apart a decade ago out of concern that government inquiries and civil suits could threaten their entire empire.
But the companies have a structure that gives certain shareholders — in particular, the Murdochs — far more voting power than others, and since the fall, they had been exploring a reunion at Rupert Murdoch’s request.
Still, any deal would have required majority approval of the companies’ other investors with supervoting shares. And dissent lurked even within the Murdoch family: Younger son James, who has left his executive roles in the family business but remains a beneficiary of the family trust, opposed a merger and wrote letters to both boards in the fall, raising questions about the deal — a move first reported by the New York Times.
Merger talks were also complicated by a show of interest from an outside company that would like to acquire News Corp.’s $3 billion stake in digital real estate business Move, according to a person familiar with the discussions. Jim Kennedy, a spokesman for News Corp., declined to comment.
At the time of the 2013 split, the elder Murdoch promised it would “enable each company and its division to recognize their full potential — and unlock even greater long-term shareholder value.” As recently as 2019, Lachlan Murdoch told Fox investors that the family had no plans to combine the companies. But his father raised the possibility last fall with his older son and assorted advisers, according to people who have spoken to him and who spoke to The Washington Post on the condition of anonymity to discuss private conversations.
In November, Irenic Capital Management, an activist investor, sent a letter to News Corp.’s special committee objecting to the merger. T. Rowe Price, a major News Corp. shareholder, told the New York Times that the proposed recombination would depress the value of the company, which was already trading below what it was worth.
On Tuesday night, Irenic said it had reviewed a letter from the senior Murdoch notifying them about the withdrawal of the proposed combination. Adam Katz, co-founder of Irenic declared himself “encouraged” by the move.